European Economics

European Economics

European Economics Update

20 March, 2017

Inflation still set to dampen real spending growth this year

The annual rate of euro-zone inflation may be nearing a peak, but its effects on consumer spending growth have yet to come. With nominal wage gains unlikely to offset higher prices, we still see expect weaker consumer spending growth to drive a significant economic slowdown in the quarters ahead. On the face of it, our earlier warnings about the effects of higher inflation may seem to have been overdone. HICP inflation reached a four-year high of 2% in February and yet hard data on total consume

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